Fianna Fáil TD for Laois-Offaly, Seán Fleming, has called on the Minister for Finance to confirm that the €350 Covid-19 pandemic unemployment payment is taxable at a person’s highest rate of income tax.
His calls come as Revenue has indicated that it will treat the Covid-19 pandemic unemployment payment as taxable income. This is because the Covid-19 payment is not on the list of tax-exempt social welfare payments.
People whose total income for the year brings them into the 20% income tax rate will have to pay 20% tax on the Covid-19 unemployment payment.
Those whose total income for the year brings them into the 40% income tax rate will have to pay 40% tax on the Covid-19 payment.
Deputy Fleming said it is important that people whose total income for the year brings them into the tax net are informed that they will have to pay tax at their highest rate for 2020.
He said, “Approximately 600,000 people are now receiving the Covid-19 unemployment payment and another 40,000 employers are signed up to the Wage Subsidy Scheme.
“It is true to say that some people won’t be paid enough by this payment alone to fall into the tax net. But no one can be sure yet as it will depend on what their total earnings are, including the Covid-19 payment, for the full year.”
Deputy Fleming also said that employees currently in receipt of the Government’s wage subsidy scheme may also be facing an income tax bill next year.
He continued, “Instead of the cash being taxed ‘at source’ like most wages and salaries, the wage subsidy scheme is liable to tax in the future.
“Minster Donohoe should explain clearly to employees at what point in the future and what frequency deductions will be made to their wages/salaries by Revenue to collect any extra tax arising.
“The Minister needs to be open and upfront to allow employees to set aside what they need to now, so that there are no financial shocks in the future,” concluded Deputy Fleming.
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